Alternate strip club fee bill passes House

Sexually oriented businesses, including adult video stores and nude dancing clubs, would pay a 10 percent tax on their entry fees under a bill tentatively passed today on a voice vote in the House.

The revenue generated is expected to be significantly less than the clubs alone would have paid under last session’s bill that added a $5 per-patron fee. The clubs have successfully attacked that law as a violation of the First Amendment because much of the money was earmarked for low-income health care. The state’s appeal is pending at Austin’s Third Court of Appeals.

The 10 percent tax would raise up to $8 million, compared to an estimated $40 million that budget analysts anticipated from the 2007 law (only $11 million has been paid to Texas so far, and is being held by the state comptroller pending the outcome of the legal challenge).

Rep. Senfronia Thompson, D-Houston, offered a bill backed by the Texas Entertainment Association, which represents the clubs. The bulk of the money would fund services for sexual assault prevention and victims’ services.

“We’re going to be able to end the lawsuit and allow the state to be able to spend $11 million,” said Thompson.

Rep. Thompson’s bill is HB982, and it passed the House by a near-unanimous vote of 142-1. Rep. Ellen Cohen voted for this bill, but is still pushing her alternative as well.

Cohen has dozens of co-authors on her own replacement bill, which she says would address the courts’ concerns by reducing the per-person charge to $3 and making sexual assault prevention programs the sole beneficiaries. Cohen, whose bill is in committee and has not yet come up for a House vote, said Thursday she would vote for Thompson’s bill – as a supplement to hers and not a replacement. A recent University of Texas study estimated Cohen’s $3 fee would raise between $16 million and $18 million annually, while Thompson’s 10 percent admissions tax would raise between $500,000 and $1.2 million. Thompson says that number is low, and that her bill would raise between $4 million and $6 million annually.

“What we need to do is make sure whatever we’re doing raises the most amount of money for the greatest amount of good,” Cohen said.

Rep. Cohen’s bill is HB2070, and it’s pending in the Ways and Means committee right now. I’m curious about the different financial projections given in these two accounts. There’s a huge gap between “$500,000 to $1.2 million” and “up to $8 million”, or even “$4 to 6 million”. Here’s one possible reason for the discrepancy:

Critics of the bill say topless clubs could simply circumvent the law by removing or reducing cover charges. And, they add, many adult bookstores do not charge an admission fee.

“House Bill 982 is a bill pushed by the strip club industry as a supposed compromise. It raises very little, if any, money,” said Torie Camp, deputy director of the Texas Association Against Sexual Assault.

Well, okay, but I suspect most strip clubs charge a cover fee to raise revenue for themselves, so it’s not clear to me how reducing or removing that fee in order to circumvent a tax would be good business for them. And the original bill didn’t include adult bookstores, so I don’t quite get the objection there, either. Be that as it may, this bill has passed the House while Cohen’s is still in committee, and at this point of the session, with so much more to be done, I think that has to be taken into account, because this may be all that can get done.